Only the industry’s proven maturity can save it from lean times

28 March 2017

May
you live in interesting times”, is a phrase that may at first sound like a compliment
but a moment’s reflection reveals a more sinister side. While the origins of
the phrase may be disputed it cannot be disputed that South Africa’s logistics
industry, perhaps even the transport and freighting industries too, currently
find themselves in interesting times.

Stock
theft, hijackings, and accidents are not new facets of the industry. But they’re
old problems experienced and being dealt with in new ways. So too is the fact
that profits are under pressure and our industry, like so many others, fights
to remain relevant during turbulent economic times, growing government
involvement, labour, and other issues.

Yet,
thrown into this melting pot, technology is helping the industry evolve,
progress, and innovate, particularly in South Africa where we already owe the
incumbents a major debt of gratitude for their pioneering safety and
responsibility measures singularly responsible for a robust track record.

We
don’t encounter a lot of theft off flatbeds in our sector of the industry because
we don’t move a lot of white goods but accidents are a concern across sectors.
The biggest impact is on human life, even as the financial cost to replace
horses and tankers, for which you may even have to wait three months regardless
of cost, is still very high.

Hard
experience, however, has taught us that the best way to curb accident rates is
by addressing driver behaviour. We, and I include not just my own company but
many responsible logistics solutions providers, put a lot of effort into
promoting good driver behaviour and we use technology to help us train drivers
and enforce policies. Tracking and built-in vehicle systems monitor aspects of
vehicles in motion from sudden swerves to harsh braking and similar while we
also have cameras that check a variety of conditions in cabs, including how far
ahead drivers scan the road, if they skip stop streets and so on.

We
must remember too that truck drivers are exposed to the same road user culture
as the rest of us on a daily basis. That includes any manner of professional
and nonprofessional drivers, many with flexible interpretations of good and
safe conduct. It’s because of this that we have to programme good behaviour
into our people and that means doing it across the board not just focusing on
drivers. For example, using a cellphone while driving is a dismissible offence.
Not just for our truck drivers but for everyone in the company. If anyone in
our business is seen driving into our premises, for example, while texting or
using a cellphone they can be immediately dismissed. You have to make behaviour
part of the company DNA or it just doesn’t work. We have to promote other healthy
behaviours too, such as regular breaks to avoid fatigue. Part of that culture
of responsible behaviour means we facilitate regular medical check-ups where a
variety of important health aspects are tested, much like what pilots undergo
in their physicals.

There
are other measures too, such as regular drug tests, alcohol tests (before every
departure), and checks even when drivers overnight en route. We also offer
positive reinforcement for good behaviour. For example, quarterly scoreboards
record which drivers exhibit the best behaviour based on the results of
telematics and in-cab cameras and we have an annual award with a large reward
for the top scorers. Another
reward is the highly prized first refusal to top performers of the new vehicles
and the best routes.

All
of this is self-regulation and all the top companies apply the same or similar,
rigid regulations. The challenge we face is when inexperienced operators set up
shop and they haven’t learned the hard lessons as to why it’s so important to
self-regulate, why the expense is necessary, and how it ultimately helps long
term revenues better than short term profits. These checks, balances and safety
procedures, training, and systems are obviously extremely costly and that’s before
you even get to the fuel industry where the regulations and stipulations are
even more onerous. That’s a different game altogether.

Fuel
theft, on the other hand, is a major problem for our industry. Fuel was
recently being stolen from a tanker in a neighbouring country where a resultant
fire reportedly caused the deaths of over 70 people. That’s the real cost of
fuel theft, the human tragedy. The incident involved petrol which is far more
flammable than diesel and people were apparently carting it away in open
containers so there was a mass of exposed fuel and vapours trailing some
distance from the vehicle.

We’re
working with a supplier to pilot a sensor on the valves of fuel tankers that
will alert our control room immediately if a valve is opened. That’s not a
failsafe solution, I’m not sure you can ever arrive at that point, but it’s a major
step in the right direction.

One
of the primary benefits for safety in the transportation of fuel to date has been
the stringent requirements by the major petroleum brands in the country. Those
companies have done exceptional work promoting safety and they need to be
acknowledged. For example, they demand route planning for every trip by every
vehicle, which requires any rest stops be predetermined and the locations pre-scouted.

By
itself that’s a tall order since drivers are mandated to stop for 15 minutes
every two hours. They also demand KPIs, medicals, verified service records,
wheel change records, calibrations, valve tests, pre-journey checks – and much,
much more.

That’s
all been the work of the major fuel businesses in the country without any
involvement from government. It’s been a private initiative and it’s worked tremendously
well for everyone, including the general public and other road users. And that
work has also resulted in a great deal of efficiency in the industry where
profits are once again under pressure due to general economic conditions. No
industry can remain stagnant and that’s particularly true for ours. It’s all
about continually striving for efficiencies to work smarter, particularly when
margins are under pressure, just as we did in 2009. We learned then that it
doesn’t last forever, the market will correct itself, but you have to survive
in the meantime. A crucial aspect will be maintaining liquidity.

I
expect we’ll see the markets turn in around 18 to 24 months because we’re a
mining economy governed by commodity markets that require logistics solutions
between two of the busiest ports, Richards Bay and Durban, and the mines they
serve. Added to the positive nature of this outlook is the fact that South
Africa’s logistics industry is among the foremost in the world for the application
of technology in the supply chain. The technology is there to drive margins and
the only way we can do that is to use the technology to help us sell solutions,
not transport. Transport is a cost and nobody will buy a cost from you.

In
fact, logistics solutions go beyond freighting and simple transport, and are a
major facet of economic growth throughout Africa. These solutions include
everything from the ports, roads, vehicles, drivers and driver training,
telematics, all the IT systems from the sensors to the fleet management,
regulation records and even routing systems – everything from A to Z.

The
technology, the guidelines, regulations, requirements, oversight, everything we
can attribute to what we call a mature industry, stimulates and fosters
economic growth. And, once again, much of the innovation is due to the major
players in the industry. These majors are almost solely responsible for the
progressive nature of the industry typically unseen by the general public. We
can focus on the positive outcomes of their initiatives, replicate those, and
spread them throughout the various sectors of the industry, to ensure our
continued relevancy, evolution, and progress during interesting times.

Disclaimer: The information and opinions expressed in this website and the Supply Chain Update newsletter in no way constitutes professional advice and does not necessarily reflect the views and opinions of the editor and staff of Supply Chain Update or Vicenda.